GRMC trustees approve five-year contract for CEO

The Gila Regional Medical Center board of trustees officially extended its contract with new CEO Taffy Arias to five years after just six months at the helm, at their meeting on Friday. Questions and complaints raised by the public once again about the transparency of how the board handled the extension inspired promises from board members that they will be more open in the future.

The board’s first contract with Arias was approved in May 2017, after a shaky leadership turnover at the hospital. The process by which she had been selected — in part through weeks of meetings of a 15-member selection committee — was celebrated by many as a landmark in transparency and community involvement for the board of trustees. She arrived at Gila Regional in June.

She found Gila Regional reeling from continued financial distress and public backlash against the board’s handling of its decision to replace longtime contractors at the Gila Regional Cancer Center with the University of New Mexico Comprehensive Cancer Center. Not long after, the Grant County Commission — which owns the hospital and appoints the board of trustees — announced that its request for proposals for a consultant to help “evaluate the hospital’s ability to continue as a standalone entity” had brought them to one Juniper Advisory. Arias had been at Gila Regional for one month.

At some point in the months to follow, Arias apparently asked the Law Firm of Gabriel M. Parra, LLC to “review her Chief Executive Officer Employment Agreement in connection with the renewal and extension of her employment.” That comes from a letter to Arias and board Chair Jeremiah Garcia, dated Oct. 27, 2017, which an anonymous source gave to the Daily Press this week — along with the full revised agreement — after a letter to the editor regarding the contract extension. The letter goes on to describe that the contract could be terminated “with cause.” If it is terminated without cause, though, at any point in the five-year period, Arias would be paid out for the remaining time in her contract. In the extended agreement, Arias will continue to be paid her original annual salary of $270,000, plus benefits. At the end of five years, that comes to $1.3 million.

The extended agreement approved by the board of trustees on Friday doesn’t start the count over now, instead retroactively extending the original contract to five years from its initial approval. Arias is now contracted to remain with Gila Regional into 2022.

This extension is in keeping with what Arias told the board before her arrival and what she told the Daily Press one-on-one when she did arrive. Her vision then of her tenure was one of years of stability.

“What the community needs is that consistency,” Arias said in June 2017. “A consistency of ownership of the issue. They want to make sure someone has a vested interest in that.”

It just wasn’t what was reflected originally in her two-year contract with the board. At Friday’s meeting, trustees said the main reason for that at the time was their own wariness after such a tumultuous run in leadership changes, not because of any lack of confidence in Arias.

“We went through several years with a couple CEOs so we were gun-shy,” said Trustee Mike Morones. “We were focused on a short-term contract. That was understandable. But when that landscape changed, so did our needs.”

“We had fear in our hearts as trustees,” said board Chair Garcia. “We were sick to death of CEO, interim, CEO, interim.”

The board touted Arias’ performance in the six short months she has helmed Gila Regional as having given them the confidence to extend the contract.

“The old way of doing business wasn’t working,” Morones said. “We need to move forward and I believe Mrs. Arias has illustrated a strength to move forward the way she sees fit. She has illustrated that she is not motivated by politics, she is not here to be anybody’s friend, she is here to do the job. If she was more popular right now, actually, then I would be worried.”

“[This team] is taking the hospital in the right direction, but that takes time,” said Trustee Joel Schram. “They need time. You cannot expect someone to accomplish that by pulling the rug out from under them in just two years.”

“It is not easy to get qualified people to this town and stay here,” said Trustee Jeannie Miller. “Taffy wants to be here. The thing that is critical is, this person has a medical background. She understands hospitals. She has been in every part of the hospital. She knows what she’s doing. Why in the world would we not want to extend a stable basis to her to get the job done?”

The vote to extend Arias’ contract was not unanimous. Dr. Victor Nwachuku voted in opposition to the extension, citing concerns from his fellow physicians regarding the five-year length of the contract.

In all, though, members of the public who spoke at Friday’s meeting were far more upset at the lack of transparency through which the board of trustees settled the agreement — especially this close on the heels of the public outcry against its handling of the cancer center contractor replacement. Because the Oct. 27 letter from Gabriel M. Parra, LLC was “Received & Approved,” and signed that same day by three trustee members of the board’s executive committee: Morones, Nwachuku and Garcia. But the agreement was never mentioned in a public meeting, never appeared on an agenda and was certainly not approved until Friday. And as regular hospital watchdog Linda Nichols said, “It’s not the contract I had a problem with, but the way it was done.”

“At this meeting in November, Taffy made the statement about the public not trusting you,” Nichols said during public comment. “And that is right. We don’t. It is things like this that makes us not trust you guys.”

She then read the definition of the word “malfeasance.”

“Had we the public not found out about it, I doubt it would have appeared on today’s agenda either. If it was a decision you were so proud of, why was it so secret? You want us to trust you. Well, you can call it cover-up or dealing under the table, but you haven’t given us much reason to trust you.”

The board members agreed that they did not handle the extension in the proper way and that their chosen process had lacked transparency.

“I apologize if there was any lack of transparency,” Morones said. “There was and I can’t deny it.”

“Maybe there hasn’t been enough transparency,” Garcia said. “Our focus has been on what we’re going to do to keep our doors open. But we have made the turn.”

Garcia told Nichols that in executive session before the vote several of the trustees agreed that the extension had been handled poorly.

Board members justified the extension again by saying it offers stability not just to Arias, to keep her here comfortably, but also to the hospital itself as it moves forward.

Morones said that as the County Commission continues its evaluation of the various options available to progress in management of the hospital, one of those will be to leave the hospital a stand-alone entity as it is now. He said that through this extension, the board of trustees will offer an actually viable, stable option of what that can look like.

“There is going to be discussion and debate among our commissioners and the public as a whole of the various options,” Morones said. “That is a good thing. But in that, we do not and cannot allow ourselves in our charge of governing a good, high quality, stand-alone hospital, we can’t limit the commissioners. We have to give them the opportunity to look at a high quality stand-alone hospital. In doing that, a two-year contract is contrary to that ability. If two years is not attractive in this environment, and we go from resigning CEO, to interim CEO, to CEO again, that is not a viable stand-alone. We have taken an option away from our commissioners. The average CEO contract is three to four years, so we’re a bit outside of that. But in that, we have locked in the stability. We have a CEO who is committed to us. Along with that, we have to secure a very competitive edge to our peers in Deming, Las Cruces and elsewhere.”

Giving Arias the longer contract also, according to Morones, protects the hospital in the case of her deciding to leave because of any concerns she has.

“A two-year contract means that if there is a change, we cannot allow for somebody to have a contract fall apart without non-compete components,” Morones said. “All of a sudden, we have a competent person with detailed knowledge of our strengths and weaknesses, out there. We need to have a certain buyout provision so that if that materializes, we are secure competitively.”

According to the letter, “The Agreement continues to restrict Ms. Arias from any activities that would compete with or be detrimental to the activities of GRMC.”